Congress governance structure plan for state-owned firms

A new governance structure for state companies proposed by the Irish Congress of Trade Unions (ICTU), which would allow them easier access to capital and greater commercial independence, could face opposition from trade union members.

A plan entitled, 'A New Governance Structure for State Companies', has been put forward as a 'concept for discussion' by the Irish Congress of Trade Unions (ICTU) for constituent trade unions. The document, made available to the media in March, urges the establishment of a Holding Company that would allow state owned companies to operate free of political interference.

The proposal would allow those companies which seek to expand to have ready access to capital if their investment proposals are robust enough. Where they were required to fulfil non-commercial roles, they would be transparently compensated by the state.

The Congress idea would allow an injection of capital into state companies without actually privatising them, thereby dealing with the problem that the Government currently faces in regard to the state-owned airline, Aer Lingus. As things stand, the Government can invest in the airline, but it is not disposed to do so for political reasons and because state investment is very complicated under EU regulations.

The document, however, is likely to face as much scepticism within the trade union movement as it is from external critics, with unions and union members surely to be mindful of how the plan would impact on a case-by-case basis.

According to the independent weekly magazine, IRN Report, the 46,000 workers employed in the state companies 'may prefer to stick with what they know, rather than look to the future in the way that Congress would like them to'. New corporate governance principles driven by marketplace requirements might make life more difficult for a workforce that is older than the average across the private sector, IRN suggests.

However, Congress knows that by leaving the current situation drift, the state companies are likely to remain a source of ongoing friction as members try to defend the status quo. Disputes in the sector also have a detrimental effect on the coherence and standing of the social partnership agreements, under which the Irish economy has prospered since 1987.

The first real test of the new Congress concept will come at its biennial conference in Belfast this summer. Congress says its proposals represent radical reform, but it is one which is moving with the flow of trends:

• With the increasingly competitive environment where rapid commercial decisions are required.

• where access to new equity must be rapidly decided for expansion purposes, having being professionally analysed.

• where new funds would be readily available.

• where private capital is allowed in, but in a controlled, passive, but positive way.

• It would be is a far more transparent system of governance

• It is line with the latest analysis from the ('usually conservative') think tank, the OECD.

• Where it does not cost the taxpayers one penny but will generate capital appreciation for her.

• Which will generate employment, value added and assist in the development of an additional number of Irish-based multinationals, when the more dynamic of these companies expand overseas and into new areas in the domestic economy.

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